The California city of Berkeley could soon create its own cryptocurrency after a go ahead to study the idea from its city council.
If feasible, Berkeley could issue what its city council is calling a blockchain-based “microbond.”
“It’s happening. We passed it,” said Ben Bartlett, the vice mayor and council member who started the initiative.
According to Berkeley’s city clerk, the council determined to “refer to the 2018 prioritization process to direct the City Manager to produce a report outlining steps required if the City were to implement a Pilot Project for the Community Microbond Initiative within 90 days.”
Another representative on the city council, Susan Wengraf, stressed that “this action does not imply approval at this time.”
However, according to a different council member who chose not to be named, the proposal is moving at a rapid speed.
“This is a really big win,” the member said, explaining that the forceful support indicated by five of the nine council members means that, rather than taking a decade, the project is likely to move along at a good pace.
If the city decides to move forward, Berkeley would be the first city to use blockchain technology in public finance for muni-bond issuance.
Currently, Bartlett explains, costs created by financial intermediaries — Wall Street, essentially — means municipal bond issues have to be large to be cost-effective.
That means the minimum a person can invest has to be up to $5,000 or even $100,000. “No one can buy them,” says Bartlett, adding, “they’re not targeted to specific needs for neighborhoods and communities.”
Bartlett thinks that blockchain technology means the city could issue debt in increments of $5, $10 or $25 each.
“Blockchain allows us to really disintermediate that process and make bonds more affordable for communities and for people,” he said.
Among the projects he thinks Berkeley could fund using the bonds are a homeless shelter, an ambulance or an individual fire truck.
Berkeley already has a plan for tokenized affordable housing involving a muni-bond backed initial coin offering (ICO).
The city has agreed to cooperate with muni-bond market tech startup Neighborly on the initiative.
By using blockchain, the bond issuance plus any related transactions would be recorded on the public ledger.
Moving to the blockchain would cut down on the third-party service providers that are required in the process. That would slash expenses for Berkeley, lowering the cost of borrowing.
While the vote to research the public ledger was unanimous, some council members still had questions.
Councilwoman Susan Wengraf was on record wondering if using blockchain for micro-muni bond issuance may be “overkill.”
Microlending has a long and rich history in the developing world, where it’s mostly used to finance small businesses and individual producers.
Using blockchain and microfinancing to end run the bond market is an entirely different approach, but one that seems to have a future in California.
Small-cap winners galoreThe big stock market winners share one common attribute: Near the beginning of the ascent of their shares, the companies offer revolutionary products or services, are market leaders in their respective industries, or both. Some big stock market winners that possessed the attributes outlined above are Netflix (NFLX), which we recommended to investors in October 2002; Intuitive Surgical (ISRG), which we bought and recommended in July 2004; Baidu.com (BIDU), which we bought and recommended in August 2006; and MercadoLibre (MELI), which we recommended to investors in October 2010. Get up-to-date small-cap stock picks from David Frazier, editor of Small-Cap Profit Confidential.
Smarter cryptocurrency investmentsThe stock market crash of 2008 was the catalyst for his journey into alternatives. And interestingly, it was the impetus behind the creation of Bitcoin and the blockchain technology behind it. Keene Little wasn’t ready to risk his money yet but he was very curious, so he began charting Bitcoin’s technical patterns. What finally convinced him to dip a toe into digital currencies was seeing that they followed familiar price patterns that could be analyzed and successfully acted on. Now he shares those insights with subscribers to the Crypto Wealth Protocol.